Welcome to the 36th edition of the BKI Quarterly Report, prepared by Contact Asset Management (“Contact”).
A Real Estate Investment Trust (“REIT”) is a listed entity that owns and operates real estate assets to provide an investment opportunity. In many ways, it is not dissimilar to a Listed Investment Company (LIC). A REIT allows investors to benefit from valuable real estate assets in a variety of classes including Industrial, Commercial, Residential, Shopping Centres and Office. Access to a REIT through the purchase of individual company shares has its advantages and disadvantages, again not dissimilar to a LIC. In this report, we consider several REITs, some of which are owned in the BKI Investment Company and Contact Ex-50 Fund portfolios. We discuss that while the property sector’s recent performance has been dominated by the movement in rates and yields, it’s the core fundamentals such as balance sheet, pipeline of works, occupancy rates, rental growth and management that are essential for REIT stock picking over the longer term.